Property Week - January 19, 2011
Prupim has completed the £125m purchase of three supermarkets on a sale-and-leaseback basis for M&G’s Secured Property Income Fund.
The real estate fund manager has bought three Sainsbury’s superstores in Worcester, Truro and Huddersfield. The leases at stores are for 25 years, with RPI-linked rent reviews.
Steffan Francis, director of fund management at Prupim, said: “These assets, which offer long-term income from a high-quality tenant, with the added security of good quality underlying real estate, meet the needs of institutional investors in the fund.
“Pension schemes in particular are increasingly attracted to this Fund as properties such as these can help address inflation risk at a lower cost than equivalent government bonds.”
The M&G Secured Property Income Fund targets prime properties, many on sale-and-leaseback arrangements, let to high quality tenants. Other assets include offices, hotels, student accommodation and healthcare. All leases have contracted rising rental income - typically linked to inflation - with a weighted unexpired term of around 25 years.
The M&G Secured Property Income Fund was launched three years ago to enable pension schemes to diversify some of their inflation risk management away from index-linked gilts. It offers an additional yield pick up of 3.5% over index-linked government bonds.
Prupim and GL Hearn advised Prupim. Jones Lang LaSalle acted for Sainsbury’s.
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